Be careful with W-9 forms! I had a client who turned out to be running a scam operation. They collected W-9s from freelancers but never actually had work (just kept saying projects were "coming soon"). Later found out they were using the info for identity theft. Always verify the company is legitimate before handing over your W-9. Check their website, look for reviews, maybe even ask to talk to other freelancers they work with. If anything feels off, trust your gut!

Great question! A W-9 is essentially your way of providing tax identification information to someone who's going to pay you. Think of it as a formal way of saying "Here's my legal name, address, and tax ID number so you can report payments to the IRS." For your freelance graphic design work, this is completely standard. When your client pays you $600 or more in a year, they're legally required to send you (and the IRS) a Form 1099-NEC showing how much they paid you. To fill out that 1099 correctly, they need the information from your W-9. A few key things to know: - You're not sending the W-9 to the IRS yourself - it stays with your client - The $600 threshold is cumulative for the whole year, not per project - Even if you don't hit $600, some companies request W-9s anyway for their record-keeping - You still need to report ALL your freelance income on your tax return, regardless of whether you get a 1099 As others mentioned, consider getting an EIN (Employer Identification Number) from the IRS website - it's free and you can use it instead of your SSN on forms, which many freelancers prefer for security reasons.

I've been dealing with this exact situation for the past two years while living in Japan. Here's what I've learned from experience: The privacy concerns about virtual mailbox scanning are valid but manageable. I started by researching the specific virtual mailbox service thoroughly - looked up their Better Business Bureau rating, read their privacy policy in detail, and even called to ask about their employee background check procedures. Most reputable services do have strict protocols for handling sensitive documents. My solution has been a tiered approach based on the sender and envelope appearance: - Routine IRS notices (like balance due reminders or informational letters): Let them scan - Anything certified, registered, or marked "Important Tax Document": Always forward - First-time notices about new issues: Forward to be safe One tip that's saved me hundreds in forwarding fees: I set up an IRS online account and enrolled in email notifications. This way I get advance warning when they're sending something, so I can prepare my virtual mailbox instructions accordingly. The key is finding a virtual mailbox service that gives you granular control over each piece of mail rather than an all-or-nothing approach. It's worth paying a bit more for that flexibility when you're dealing with tax documents from overseas.

I've been dealing with this same dilemma for about 18 months now while living in Thailand. What really helped me was calling my virtual mailbox service directly and asking about their specific security protocols for financial documents. Turns out they actually have a separate, more secure process for anything that looks like it's from government agencies - different employees with higher clearance levels handle tax-related mail. One thing I'd suggest is starting with a test approach: if you get what looks like a routine IRS notice, let them scan it and see how comfortable you feel with the process. You can always switch to physical forwarding for future mail if the scanning doesn't feel secure enough. Also, I learned the hard way that some IRS notices have time-sensitive deadlines that you might miss if you're waiting for international forwarding. Having that immediate digital access, even with the privacy trade-off, has actually prevented me from missing important deadlines twice now. The key is being selective about which documents you're comfortable having scanned versus which ones truly need the security of physical forwarding.

As someone who's been freelancing in video editing for about 18 months now, I can share some real numbers. My effective tax rate ended up being around 18% of gross income after all deductions last year. Key deductions that made a big difference for me: - Home office (about 15% of my rent/utilities) - Equipment depreciation on my editing rig and monitors - Adobe Creative Suite and other software subscriptions - External storage and backup solutions - Partial car expenses for client meetings - Professional liability insurance The biggest surprise was how much the home office deduction helped - I have a dedicated editing room, so I can legitimately deduct that percentage of all housing costs including rent, utilities, even renter's insurance. I'd recommend setting aside 25% of each payment when starting out. Better to have a cushion than scramble to pay quarterly taxes. Once you get a feel for your actual effective rate after the first year, you can adjust accordingly. Also consider making estimated payments slightly higher than required - any overpayment becomes a refund, and it's better than owing penalties for underpayment.

One thing I wish I'd known before going freelance - don't forget about quarterly estimated tax payments! The IRS expects you to pay as you go, not just once a year. If you owe more than $1,000 when you file, you could face underpayment penalties even if you pay everything by the April deadline. The due dates are January 15, April 15, June 15, and September 15. I use Form 1040ES to calculate what I owe each quarter. Pro tip: if you had W-2 income the previous year, you can base your estimated payments on 100% of last year's tax liability (110% if your AGI was over $150k) and avoid penalties even if you end up owing more. For video editors specifically, income can be pretty irregular - some months feast, some months famine. I found it helpful to set aside 25-30% of every payment into a separate tax savings account, then make estimated payments from there. Takes the stress out of those quarterly deadlines when you know the money is already saved up.

Has anyone used the tax software to handle this situation? I'm using TurboTax Self-Employed and I'm not sure where to enter the business sale. It keeps asking me for ending inventory but doesn't seem to have an option for "sold the entire business.

I went through this exact scenario last year when I sold my consulting business. The key thing to remember is that Form 1125-A is specifically for tracking your normal business inventory flow throughout the year, not for one-time asset sales. Here's what worked for me: I reported zero ending inventory on Form 1125-A (because factually, I had no inventory left at year-end). The $158,503 inventory cost flowed through to COGS naturally. Then I reported the entire $162,650 sale proceeds on Form 4797 Part II, with the $158,503 as my basis in the inventory, resulting in the $4,147 gain being properly classified as business asset sale income. This approach keeps your regular business operations (reflected in COGS) separate from the asset sale transaction, which is exactly what the IRS expects to see. Make sure you have good documentation of the sale agreement and date - the IRS may want to verify the business closure if they see your inventory drop to zero.

I completely understand your anxiety about seeing code 420 on your transcript - that "Examination of tax return" language would make anyone nervous! But based on what you've described, this actually appears to be really good news. The combination of code 420 with a $0.00 amount is what tax professionals call a "no change audit" or correspondence examination. This typically means the IRS flagged your return for automated review (very common with higher-income returns like yours showing $183,265), cross-checked your reported figures against their records from employers and financial institutions, and found everything matched perfectly. The timeline also supports this - you filed in March 2023, the examination code appeared in July 2023, which is a typical processing window for these automated verifications. Since it's now been well over a year without any CP2000 notices or formal audit correspondence, the examination was almost certainly closed with no issues found. For absolute peace of mind, you can call the IRS at 1-800-829-1040 to confirm the examination status, or check your online IRS account for any messages. You might also look for code 421 on more recent transcripts, which would officially indicate the examination was closed with no changes. Your mortgage application should proceed without any problems - this looks like routine processing that's already been resolved in your favor!

I went through this exact same situation with my 2019 return! Code 420 appeared on my transcript and I was absolutely terrified I was being audited. Like you, I had a higher income return and made a large payment, which apparently triggered their automated review system. The $0.00 amount next to your code 420 is actually the best possible outcome - it means they completed their examination and found no adjustments were needed. If they had discovered issues, you'd see a dollar amount reflecting additional taxes or penalties owed. What really helped ease my mind was calling the IRS directly at 1-800-829-1040. The agent confirmed that my examination had been closed with no changes and explained that these automated reviews are incredibly common for returns with significant income like ours. She said the IRS cross-references reported income against W-2s, 1099s, and other third-party documents they receive. Since it's been over a year since your code appeared and you haven't received any CP2000 or formal audit notices, you're almost certainly in the clear. The IRS is legally required to notify you if they find discrepancies or need additional information. For your mortgage application, this shouldn't be an issue at all - lenders see these examination codes regularly and understand they're often just routine verifications that result in no changes.